THE BUTTER SLUMP.

Shannon News, 16 January 1925, Page 3

THE BUTTER SLUMP.

INEVITABLE REACTION OF FLOODED MARKET. ‘PRODUCERS SHOULD TAKE STEPS.” HAMILTON, Jam 12. important observations, based upon his. inquiries into me marketing ot New: Zealand dairy produce in -Britain as a member of the overseas delegation lrom the Dairy Control Board, were made to-day by Mr W. Claude motion, in reierence tQ the remarkable slump in - tiie price ol butter. “Our annual slump seems tq have arrived a little earlier’ than usual this year,” said Mr Motion, when his attention was drawn to. the fact that New Zealand butter stood at 1645. to 168 s, although Danish stood at 2045. “This slump and its annual recurrence is. a very serious thing iqr Ne.w Zealand,” he added, “because this country now. derives in revenue nearly £20,000,000 from its dairy products, and a difference qf a penny in the price qf butter means a loss to tiie producer of approximately £600,000. When the Home market crashes, as. it has done, therefore the whole country' stands to suffer most heavily. “The heavy drop in our prices at this period of the year, is absolutely inevitable,” continued Mr Motion, “so long as our present system of unregulated dispatch of produce to the market continues. The weekly record of prices of both Danish and New Zealand butter since August, 192 a, shows that a period of low price is bound to occur each year as soon as heavy supplies, from the. southern hemisphere reach London. This fs simply due to the weight of supplies reaching there within a limited period of time being greater than the market can absorb. Britain’s, consumption is reckoned to be between 50:>0 and 6000 tons weekly, but the arrivals in the near future will be about 7000 tons per week. Buyers naturally reduce their figures in face of the surplus, offering tq buy what, they want at their own terms, and then, as supplies ease off, the price hardens and becqnies satisfactory one more. “In a period qf low prices, however, so large a proportion of producers’ butter quits their bands, firs.t that the pqducers’ returns for the season are seriously affected, while the consumer, it is important to no.te, does not necessarily derive ,an y advantage from the temporary low level of price, because many buyers are in a position to hold large .quantities, and lay themselves out to do so. Naturally, these men do not pass ali the benetit of tlie.ir outlay to the public. “When I was Home, I received definite information that at that time one holder alone on the market had approximately £25,000 worth of. New Zealand butter in store. This had been bought when the market was low, and., as it had subsequently improved, a remarkably substantial profit was due to be made by the fortunate firm in question.” Mr Motion proceeded to trace the

history of the four slumps in past years. The first- occurred in 1921-22, on the sale, at about 12Qs, of surplus imperial stocks. The second was in April, 1923, when the market touched 1455, and the third was in April, 192-4, when produce dropped to 150 s. The iourth was now in progress. All were 'caused by the same circumstances, namely, temporary over-weight of supplies, oil the Home market. “It is important for producer’s to' note,” continued Mr Motion, “that t lie Danish price has nQt slumped m accordance with New Zealand and Australian figures. This is because the Danes have developed a regular, specialised outlet for their produce. They supply regular trade customers with a regular quantity week by week throughout the year, and by never over-loading their market, manage to maintain a definite, ootnsideraoie premium over all ,couipeting butters! They do this not by superior quality, but by. superior business management mid market supervision. If they find the demand Qf the British market incapable . of absorbing what they have available at any period, they readily sell the surplus to Germany qr any other country at tower prices, to avoid lowering prices. The maintenance of Danish retail prices, to the consumer fixes a standard lor colonial butters., so that it is not the Home, consumers who get the benefit. o.f the low. wholesale prices, ol New Zealand and Australian butters. “Our circumstances have, so far

prevented New Zealand producers from doing anything else than send tor ward their produce just as it was manufactured., and tire result of this procedure, has. been tliis annual slump which has cost quit producers so dear-

ly, For this slump no blame is. at-

tacliable tQ the Home buyer. He is only human, and it is inevitable that lie wiH react io the law' of supply and demand, and in face of a flooded market depress. the price to his. own figure. “This annual drop in prices was. one of the prime reasons of our investigations, on the Home market,” concluded Mr .Motion, “The overseas delegation made very full inquiries and has collected some very valuable information for the Dairy Control Board, but until that information and our conclusions bas.ed upon it are submitted to the board at its next meeting, 1 am not free to comment further upon the position. However,. I can’say that the present position ol the butter market is simply the inevitable reaction to the law of supply and demand, and if the. producers ol this country wish to improve their annual returns, obviously they must take some steps which will enable supplies of New Zealand produce, to conform more nearly with, the demand for it on the Home market.”

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